Nissan seeks anchor investor to help it through make-or-break 12 months

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Nissan is searching for an anchor investor to help it survive a make-or-break year as longtime partner Renault sells down its holding in the crisis-hit Japanese carmaker.

Two people with knowledge of the talks said Nissan was seeking a long-term, steady shareholder such as a bank or insurance group to replace some of Renault’s equity holding, as Nissan finalises the terms of its new electric vehicle partnership with arch-rival Honda.

“We have 12 or 14 months to survive,” said a senior official close to Nissan.

Nissan has not ruled out having Honda buy some of its shares, with “all options” being considered, as it launches a series of restructuring measures on the back of declining sales in both China and the US, the people said.

In addition, people close to Renault said it would be open to selling a portion of its shares in Nissan to Honda as part of a restructuring of its 25-year-old Nissan alliance. One person close to Renault said a stronger relationship between Nissan and Honda could “only be positive” for the French group.

Nissan and Honda have stepped up partnership talks to develop EVs and software technology amid intense pressure from Chinese rivals and greater uncertainty in the US following Donald Trump’s re-election as president.

“This is going to be tough. And in the end, we need Japan and the US to be generating cash,” said the senior official close to Nissan. After failing to capture the recent boom in popularity of hybrid sales in the US, Nissan is planning a series of key product launches in the coming months and years.

Since announcing their partnership in August, both Japanese companies had played down the possibility of a capital tie-up, with one person close to Nissan saying Honda buying a stake remained “a last resort”.

But the search for an anchor investor has become even more critical with the turmoil at Nissan attracting investments from Singapore-based Effissimo Capital Management and Hong Kong’s Oasis Management, two of the most high-profile activists in Asia whose campaigns have previously targeted the likes of Toshiba and Nintendo. 

Nissan’s closer ties with Honda came after it restructured its long-standing alliance with Renault, which was agreed after the French carmaker rescued the Japanese group from near bankruptcy in 1999.

However, the relationship was plagued by constant infighting over its unequal shareholding and voting rights, where Renault held 43 per cent of Nissan, while Nissan only owned 15 per cent of the French group without voting rights.

After their capital recalibration last year, the French carmaker cut its Nissan holding to just under 36 per cent, including a remaining 18.7 per cent in a French trust, which it has been whittling down. Nissan gained voting rights for its 15 per cent stake in Renault, which will retain a 15 per cent voting stake in the Japanese group.

Nissan also has a 34 per cent stake in smaller alliance partner Mitsubishi Motors, which it plans to cut to 24 per cent as part of its emergency turnaround measures.

Nissan declined to comment on the search for an anchor investor and the possibility of Honda buying a stake but added: “The partnership with Honda is strategically very important, and we hope to accelerate the realisation of the results of our activities through regular progress at the management level of both companies.”

Honda declined to comment.

Although Renault is not directly involved in the talks, it could be open to collaborating with Nissan, Honda and Mitsubishi as carmakers pool efforts to develop EVs in response to China’s strength in the industry, the people familiar with the matter said. Renault said in a statement there were no discussions, however, about a broader partnership. It added that it was supportive of a “potential win-win between Nissan and Honda”.

The people familiar with the matter said the outcome of the talks would present a test case for how companies could survive the industry upheaval, pitting the likes of Stellantis, which was born out of a megamerger, against smaller players such as Renault and Nissan that forge technology and regional partnerships.

“Is bigger really better? Or is the partnership model better?” said the senior official close to Nissan, noting that pursuing scale would lead to inefficiency after a certain point.

The people with knowledge of the talks said broader collaboration involving Renault and Mitsubishi made strategic sense, although the French group added that there were no discussions at present to this end.

While there is a wide overlap in geographical footprint for Nissan and Honda with their focus on China, the US and Japan, having Renault would bring strength in Europe. Meanwhile, both Renault and Honda are drawn to Mitsubishi’s competitive edge against Chinese rivals in south-east Asia and its advanced plug-in hybrid technology.

Regarding collaboration between the three Japanese automakers, Mitsubishi Motors said “we are currently exploring all possibilities and are eager to co-operate in areas where we can leverage our strengths”, but added that no specific details had been finalised yet.